Over the last couple of years, it has become clear that Trademark and Copyright owners have a tense relationship with the Internet Service Providers.
The Internet has proven to be a vast platform, accessible
worldwide, making it easier to violate intellectual property rights
on a large scale. Since it is often difficult to seek action
against the original infringer, Intellectual Property Right Owners
frequently try to hold the Internet Service Providers liable for
hosting infringed content and for facilitating the illegal
distribution of protected works. By doing so, they repeatedly ask
the courts for extensive measures, which can contravene fundamental
rights such as privacy or freedom of expression. Hence, the courts
often have to perform a balancing act between the protection of
intellectual property rights and freedom of information.
The recent case law of the European Court of Justice has clarified
the extent of the liability of the Internet Service Providers when
it comes to Intellectual Property violations and has set out basic
principles regarding this matter.
The Case ebay / L'Oréal
This judgment, rendered by the European Court of Justice on July
12th 2011, has tackled several issues concerning trademark
infringements.
This case has its origin in a dispute between L'Oréal,
the famous manufacturer of cosmetic products, and eBay, the online
marketplace.
L'Oréal has sought action against eBay, arguing that the
latter has committed various trademark infringements. One in
particular concerned eBay's liability for condoning trademark
violations committed by the users of the online marketplace.
According to l'Oréal, eBay should be held liable, given
that she is to be considered "involved" in the
aforementioned infringements and that she does not take appropriate
actions in order to end the illegal practices.
Ebay on the other hand maintained that she could rely on the
exemption as foreseen in article 14 of the E-commerce Directive
(2000/31).
The Court had to interpret the extent of the exemption of liability
provided by article 14. In its judgment, the Court stated that an
Internet service provider can rely on the safe harbor provision,
when it can be established that the operator has (i) no actual
knowledge of illegal activities or information, (ii) it is not
aware of facts or circumstances from which the illegal activities
or information is apparent, and (iii) having obtained such
knowledge or awareness, it has acted expeditiously to remove, or
disable access to, the information.
Moreover, in order to apply article 14, it is required that the
operator has not played an active role, allowing it have knowledge
or control of the illegal information or activities. The Court
further specified that the operator plays such a role when it
provides assistance which entails, in particular, optimizing of the
offers for sale in question or promoting them. Although it is left
to the national courts to decide whether eBay, or any other
operator for that matter, falls under the scope of article 14, The
European Court hinted that eBay has not played a neutral role given
that she actively provided assistance to her users so they could
boost their commercial activities.
The Case Scarlet / Sabam
This case takes it one step further, since the key question
concerned which measures an operator has to take in order to avoid
liability for intellectual property infringements committed by its
users, and more in particular, if a provider can be compelled to
monitor the traffic on their network for illegal content.
Sabam, the Belgian Society for authors, composers and publishers
filed a complaint against Scarlet, based on the fact that a number
of users of Scarlet's services were illegitimately downloading
works of the Sabam catalogue from the Internet. Therefore, Sabam
sought an injunction and asked the court to order Scarlet to
implement a filtering system that would make an end to all current
infringements and that would prevent all future violations.
The European Court of Justice has ruled explicitly on November 24th
2011 that such an injunction, requiring the installation of a
general filter, cannot be ordered by the Court since it involves
monitoring all the electronic communications that run trough the
network of the Internet Service Provider.
Given that the monitoring would have no limitation in time, would
be directed at all future infringements and is intended to protect
not only existing works, but also future works that have not yet
been created at the time when the system would be introduced, it
could not be deemed proportionate.
If this particular obligation would be imposed on Internet Service
Providers, it would result in a serious infringement, not only of
the fundamental rights, but also of the freedom of the Internet
Service Provider to manage its business. After all, it would
require the Internet Service Provider to install a complicated,
costly, permanent computer system at its own expense, which would
be contrary to both the provisions of the E-Commerce Directive
(2000/31), as to the Enforcement Directive (2004/48) which lays on
that those measures shall not be unnecessarily complicated and
costly.
National courts have the authority to grant a specific injunction
or they can hold Internet Service Providers liable when the
circumstance presents itself. However, by ordering so, a fair
balance must be struck between the protection of intellectual
property rights and the safeguard fundamental rights.
Only recently, on February 16th 2012 the European Court has firmly
confirmed these principles in the case Sabam / Netlog.
National Courts will still be able to issue orders against online
operators to take measures not only against existing infringements
but also to prevent future violations. However, such an order must
be effective, proportionate, dissuasive and must not create
barriers to legitimate trade.
In sum, the European Court, as the legislators continue to balance
the interests of the Intellectual Property holders and those of the
public in order to safeguard the rights of both. The future will
show how Intellectual Property Owners can adequately preserve their
rights in ever changing circumstances without stripping the
Internet of its fundamental values.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.